The Experience of Food Inflation Across the EU. (Transparency of Food Pricing (TRANSFOP) Working Paper 5)

The background to the TRANSFOP research project can be traced to the global commodity price surge of 2007 and 2008 with world prices of many agricultural and energy commodities rising, in nominal terms, to record levels. Although world prices fell back in 2009, by 2011, world commodity prices again rose and exceeded the peak levels recorded in 2008. The domestic impact of these events on global markets was reflected in higher levels of food price inflation though, despite the apparently ‘common’ nature of the global shocks, the effect on domestic food price inflation varied markedly across countries. This was perhaps most noticeable in the experience of many developing countries and certainly when contrasting the experience of emerging and developing economies with advanced economies. The general reasons for this broad experience can readily focus on the use of government policies via domestic intervention, the use of safety nets and changes in border measures (FAO, 2009). However, the experience of food price inflation has varied considerably across advanced economies and is also apparent among EU countries. Accounting for this poses significant challenges: given the existence of common trade and agricultural policies across the EU and the existence of the ‘single market’, why should the food inflation experience vary across EU countries? Identifying the factors that potentially determine the links between what happens on world markets and the resulting effect on domestic retail food prices is a key overall aim of the TRANSFOP project

Do Sales Matter: Evidence from UK Food Retailing. (Discussion Papers in Economics, No.11/01)

This paper assesses the role of sales as a feature of price dynamics using scanner data. The study analyses an extensive, high fre quency panel of supermarket prices consisting of over 230,000 weekly price observations on around 500 products in 15 categories of food stocked by the UK’s seven largest retail chains. In all, 1,700 weekly time series are available at the barcode - specific level including branded and own - label products. The data allow s the frequency, magnitude and duration of sales to be analysed in greater detail than has hitherto been possible with UK data. The main results are: ( i) sales are a key feature of aggregate pri ce variation with around 40 per cent of price variation being accounted for by sales once price differences for each U nique P roduct C ode (UPC) level across the major retailers are accounted for; (ii) there is considerable heterogeneity in the use of sales across retailers; (iii) much of the price variation that is observed in the UK food retailing sector is accounted for by price dif ferences between retailers; (iv ) only a small proportion of price variation that is observed in UK food retailing is common ac ross the major retailers suggesting that cost shocks originating at the manufacturing level is not one of the main sources of price variation in the UK; ( v) own - label products also exhibit considerable sales behaviour though this is less important than sal es for branded goods; and (v i ) there is some evidence of coordination in the timing of sales across retailers insofar as the probability of a sale at the UPC level at a given retailer increases if the product is also on sale at another retailer

Retail Price Dynamics and Retailer Heterogeneity: UK Evidence

We examine retailer heterogeneity in price adjustment in UK supermarkets. Considerable variation in the price change frequency of identically bar-coded products among retail chains is found. Decomposition analysis suggests that price adjustment is evenly split between sales and reference prices with substantive variation across retailers

Retailer Heterogeneity and Price Dynamics: Scanner Data (Transparency of Food Pricing (TRANSFOP) Working Paper 8)

This paper contributes to recent research on price dynamics using micro-price data sets. We emphasize a previously neglected aspect, the role of retailer heterogeneity. Our key findings are: (i) the frequency of price adjustment and the implied duration of prices varies considerably across retailers; (ii) price promotions (sales) also vary across retailers with some retailers seldom using sales, while for others sales are a common feature of pricing; (iii) the duration of reference prices is-at most-26 weeks but the duration of reference prices is around 16 weeks for some retailers; (iv) branded products have shorter durations than private label products; (v) decomposition analysis suggests price adjustment is evenly split between sales and reference prices but, for some retailers, reference prices are the main source of price changes; (vi) there is low correlation between the frequency of price and costs changes across both products and retailers. Taken together, while confirming the significance of price stickiness after accounting for sales, price dynamics vary considerably across retailers. In turn, retailer heterogeneity has important implications for interpreting aggregate price dynamics in both theoretical and empirical research

Retail price dynamics and retailer heterogeneity: UK evidence

This is the author accepted manuscript. The final version is available from Elsevier via the DOI in this record.We examine retailer heterogeneity in price adjustment in UK supermarkets. Considerable variation in the price change frequency of identically bar-coded products among retail chains is found. Decomposition analysis suggests that price adjustment is evenly split between sales and reference prices with substantive variation across retailers.We acknowledge funding under the European Commission’s Seventh Framework Programme, Project name: TRANSFOP Project no.: KBBE-265601-